The recent financial meltdown that has affected broad sectors of the economy has thus far left the operations of APS largely unscathed. Though the Society’s reserve fund has taken a hit from declining stock values, there has only been a muted effect on operations.
“Given the financial climate of the world we’re not doing badly,” said APS Treasurer/Publisher Joe Serene, adding that while “nobody’s doing well,” APS has been able to avoid much of the fallout from the chaos on Wall Street.
As of this writing in early March, the reserve fund has fallen from a peak of around $105 million at the beginning of 2008 to around $75 million, down by about 29 percent. Though significant, the loss is less acute than in many other sections of the economy. During the same period the Dow Jones Industrial Average, S&P 500 and NASDAQ each fell nearly 50 percent. The reserve fund is conservatively invested by Towneley Capital Management across 21 highly diversified mutual funds and a hedge fund.
As matters stand, the losses in the reserve fund should not affect the operations of APS in 2009. There are no expected reductions in personnel and no budget cuts for planned programs for the year.
In recent years, APS has used very little of its invested reserve fund to finance its operations. The majority of the organization’s income comes from revenue generated by its journal publications. For the last 4 years, this net revenue has covered nearly all of the Society’s operating expenses, allowing the profits from the reserve fund from the preceding surplus years to be reinvested.
“We always budget to be at an operating loss,” Serene said, “But we’ve actually been making money on operations the last few years.”
The budget for 2009 as passed by Council has no major cuts, but what effect the economic downturn may have for 2010 is yet to be seen. Many colleges and universities have been hit hard. Those whose operating budgets rely more heavily on invested assets are staring at steep cuts in their endowments for next year. The major concern for APS is that this, among other factors, could lead to a drop off in subscription revenue.
“The bottom line is no one is panicked, but we’re prudently worried.” Serene said.
Though details have not yet been finalized, it seems likely that there might be an adjustment somewhere to the society’s revenue stream. In the upcoming year the prices of meeting registration, membership dues or journal subscriptions may have to be adjusted in order to keep funding at sustainable levels. For 2009, the Society dropped prices for smaller institutions while raising the prices slightly for the largest ones.
Membership in the society has been increasing since 2001. Trish Lettieri, Director of Membership, said that initial projections look as if the trend is likely to continue.
“The Membership Department is closely monitoring what effect the current economy will have on membership numbers,” Lettieri said, “There was an increase in the total number of members this past year and as of right now, both recruitment and retention statistics are holding close to what we saw a year ago.”